N.B. Regarding trade deficits: if Alice from A wants to buy something from Bob in B, she typically pays for it with money. The source of that money is either

N.B. Regarding trade deficits: if Alice from A wants to buy something from Bob in B, she typically pays for it with money. The source of that money is either production (your option #1) or debt (option #3). (Option #2 is just past production, since people usually buy real estate with money.) In either case Alice's purchase increases the A's trade deficit with B. But it's totally beside the point that Bob lives in B. Indeed, the analysis is identical if A = Atlanta and B = Boston. There's a rough correlation between trade deficits and debt, just as there's a correlation between the number of movies people see and debt: there's a correlation between spending and debt. Focusing on foreign trade---and using the loaded and misleading word deficit---simply feeds people's xenophobia and distracts from the underlying issues.